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Thread: Understanding "Trade Deficit"

  1. #1
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    Default Understanding "Trade Deficit"

    Suppose China (just as an example for reasons that should soon become apparent) imports a brand new John Deere tractor from America (do they do that?) and pays for it with a bowl of rice.

    Is that an appropriate analogy?
    Once upon a time, they all lived happily ever after.

  2. #2
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    Default Re: Understanding "Trade Deficit"

    Quote Originally Posted by normil View Post
    Suppose China (just as an example for reasons that should soon become apparent) imports a brand new John Deere tractor from America (do they do that?) and pays for it with a bowl of rice.

    Is that an appropriate analogy?
    Well, it would be a great price for a tractor. However, if you want to understand the trade deficit, you might read something like this:

    https://www.project-syndicate.org/co...-james-2018-07

    or this:

    https://www.project-syndicate.org/co...iglitz-2018-07

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    Default Re: Understanding "Trade Deficit"

    Quote Originally Posted by johnw View Post
    Well, it would be a great price for a tractor. However, if you want to understand the trade deficit, you might read something like this:

    https://www.project-syndicate.org/co...-james-2018-07

    or this:

    https://www.project-syndicate.org/co...iglitz-2018-07
    Thanks for that. I had no idea where to look. It gets complicated, don't it?

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    Default Re: Understanding "Trade Deficit"

    Quote Originally Posted by normil View Post
    Thanks for that. I had no idea where to look. It gets complicated, don't it?
    It's not really that complicated. It's just another (disguised) mechanism for the ongoing transfer of wealth and power into the top 10%

    Free trade advocates would say that 'protectionism' is never good. And for the most part, they'd be right. But not always. If you study trade theory and the stages any economy goes thru in the transition from agrarian to industrial (see Rostow, and subsequent work in that vein)... you realize that there is actually a time when protectionist policies make sense. When a nation is attempting to maximize technology transfer, and build industrial capacity. So a nation will pay a short term premium in order to accomplish those necessary preconditions to further growth. But the U.S. hasn't been in that position for a very long time. There are few other examples - but they are scarce, and quite limited. And always short-term solutions. None of which apply to the U.S. currently.
    David G
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    Default Re: Understanding "Trade Deficit"

    And... someone else who doesn't understand. Clueless, in fact. And - amazingly - the chair of Tramp's National Economic Council. He's asked about the impact on real people, and he responds with 'minimal'. His reasoning? They haven't seen a measurable impact on the GDP. JFC... could his answer have BEEN any more irrelevant?

    Paging Georges Danton. Danton to the pike room, please.

    https://www.marketwatch.com/story/ec...of2&yptr=yahoo
    David G
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    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

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    Default Re: Understanding "Trade Deficit"

    Quote Originally Posted by normil View Post
    Suppose China (just as an example for reasons that should soon become apparent) imports a brand new John Deere tractor from America (do they do that?) and pays for it with a bowl of rice.
    https://www.investopedia.com/terms/t/trade_deficit.asp

    A trade deficit typically occurs when a country does not produce enough goods for its residents. Alternatively, a deficit means that a country’s consumers are wealthy enough to purchase more goods than the country produces.
    In the long run, however, a trade deficit may lead to the creation of fewer jobs. If the country is importing more goods from foreign companies, prices will go down, and domestic companies may be unable to produce and compete at the lower prices. Manufacturing companies are usually hit the hardest when a country imports more than it exports, and the result is fewer jobs or lower incomes for employees because of the competition from imports. Fewer jobs mean that fewer goods are produced in the economy which, in turn, could lead to even more imports and a greater deficit.
    Life is complex.

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    Default Re: Understanding "Trade Deficit"

    Tramp: unclear on the concept... lying about the facts. Claims tariffs will allow us to "be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated..." --

    https://www.yahoo.com/finance/news/t...182745854.html


    At the conservative blog Hot Air, Taylor Millard put a positive spin on Trump’s tweet: “It is nice to see Trump throw away his farcical claim the tariffs are being done to protect national security – even if the current reasoning is as harebrained as the previous one.”


    The bottom line: Trump’s tariffs won’t raise enough money to make a substantial dent in annual deficits set to climb above $1 trillion, let alone the $21 trillion national debt. CNBC’s John Harwood, appearing on MSNBC Monday morning, put it succinctly: “This is an economic gibberish argument the president is making.”


    Also... a bit of independent fact-checking --

    https://www.yahoo.com/finance/video/fact-checking-trumps-claims-tariffs-155600225.html
    Last edited by David G; 08-07-2018 at 09:54 AM.
    David G
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    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

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    Default Re: Understanding "Trade Deficit"

    More tariff news. SO MUCH winning!!!

    https://www.yahoo.com/finance/news/t...223207045.html
    David G
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    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

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    Default Re: Understanding "Trade Deficit"

    Quote Originally Posted by David G View Post
    And... someone else who doesn't understand. Clueless, in fact. And - amazingly - the chair of Tramp's National Economic Council. He's asked about the impact on real people, and he responds with 'minimal'. His reasoning? They haven't seen a measurable impact on the GDP. JFC... could his answer have BEEN any more irrelevant?

    Paging Georges Danton. Danton to the pike room, please.

    https://www.marketwatch.com/story/ec...of2&yptr=yahoo
    Hard to tell if it's a lack of understanding or a lack of caring.
    How do we form a mutiny? Our new captain is navigating poorly.

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    Default Re: Understanding "Trade Deficit"

    I do believe there's something to be said for not being totally dependent on other countries.

    The very first post I ever made to a forum was on a forum run by Bill Maher's show. I asked then why we were so concerned about being dependent on foreign sources for energy, but so unconcerned about being so dependent for manufactured goods?

    I think that's still a reasonable question.

    In war, cutting off supply lines to the troops is a winning strategy. What would cutting off supply lines to our country look like.
    How do we form a mutiny? Our new captain is navigating poorly.

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    Default Re: Understanding "Trade Deficit"

    Quote Originally Posted by John Smith View Post
    Hard to tell if it's a lack of understanding or a lack of caring.
    It is the same problem with that git in the Oval Office, since first he was a candidate. You just can't tell if he is stupid or evil.

    But even if he is only stupid, he is still responsible for the evil he is perpetrating.
    I don't care to know what the tough do when the going gets tough.

    I am interested in what the enlightened do.

  12. #12
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    Default Re: Understanding "Trade Deficit"

    "In war, cutting off supply lines to the troops is a winning strategy. What would cutting off supply lines to our country look like."

    The US is likely big enough and well endowed resource wise to be ok. But given the existing economic disparities between the 10% and the rest, and the national debt, and the existing divisions, it might be a difficult row to hoe. The present administration dos not seem, to me, to have the capacity, and both majors seem wanting and likely corrupted by years of being paid off. It would, I think, be a difficult matter. A more likely scenario would be to start a war, and not another Grenada, to distract the proles and justify even more restrictive legislation.
    And I reckon one of the first moves would be to restrict gun ownership, to reduce the possibility of armed insurrection.

  13. #13
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    Default Re: Understanding "Trade Deficit"

    Quote Originally Posted by John Smith View Post
    Hard to tell if it's a lack of understanding or a lack of caring.
    There is that. It's sometimes hard to tell the deceivers from the deceived...
    David G
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    "It was a Sunday morning and Goddard gave thanks that there were still places where one could worship in temples not made by human hands." -- L. F. Herreshoff (The Compleat Cruiser)

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